Westpac slams exit fee reforms

In an interview with The Australian, Ms Kelly said the abolition of exit fees would only make it harder for smaller lenders to compete.

Ms Kelly said that while the fee was not “a big matter for us at Westpac”, smaller players would struggle to remain competitive.

Ms Kelly’s comments echo a raft of concerns voiced over the reforms, with the changes widely expected to hit competition in the mortgage industry, thereby financing options for property investors and home buyers.

In Touch Home Loans chief executive officer Paul Ryan said that exit fees were essential to the competitiveness of smaller lenders and non-bank players.

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He argued that if the government truly wanted to introduce competition back into the mortgage space, they would make Lenders Mortgage Insurance (LMI) portable.

“The big area where an opportunity was lost was in Lenders Mortgage Insurance. Currently, those borrowers that take out Lender’s Mortgage Insurance often have to pay the fee again when they refinance with another lender. This is a huge deterrent to borrowers switching lenders, but it is a deterrent that doesn’t necessarily have to be in place,” he said.